EPA Refinery Waivers, Tax Credit Debate Beset Biodiesel Industry

---

Researched by Industrial Info Resources (Sugar Land, Texas)-- Renewable Energy Group Incorporated (NASDAQ:REGI) (REG) (Ralston, Iowa) recently celebrated the completion of upgrades to its Ralston biorefinery, which more than doubled the facility's production capacity. But the U.S. biodiesel industry is in the "midst of a storm in Washington, D.C.," according to the head of the National Biodiesel Board, as debates rage over renewable fuel requirement waivers for small refineries and the future of a tax credit for the industry. Industrial Info is tracking more than $7.7 billion in active U.S. biodiesel capital projects.

The Ralston upgrades increased the facility's production capacity from 12 million gallons per year to 30 million gallons. Renewable Energy Group Chief Executive Officer Randy Howard said in a May 10 press statement that the project positions the company for long-term growth, along with the entire biodiesel industry. For more information, see Industrial Info's project report.

But the U.S. biodiesel industry faces uncertain times as the Environmental Protection Agency (EPA) has granted Renewable Fuel Standard hardship waivers to a number of small refineries so that they are not required to cover the price of blending renewable fuels. The National Biodiesel Board and other renewable fuel groups have urged President Donald Trump to halt the issuance of such waivers, saying they are hurting their respective industries.

Industrial Info is tracking more than $7.7 billion in active U.S. biodiesel capital projects. They are in various stages of development and are assessed as having a High, Medium or Low probability of moving forward as planned.

Click on the image at right for a graph showing U.S. biodiesel projects by market region.

In a column in Biodiesel Magazine, National Biodiesel Board Chief Executive Officer Donnell Rehagan said renewable identification numbers (RINs) traded at their lowest level in more than three years in April, cutting discretionary blending by refineries and overall renewable fuel demand. RINs are credits that can be bought and sold to achieve compliance with renewable fuel standards.

And while the industry was able to get a retroactive extension of the biodiesel tax credit for 2017 in a two-year budget deal passed by Congress in February, it was unable to get an extension for 2018, said Rehagen, who maintained the "hyperpartisan nature of tax issues in the current environment" has hampered support for the tax credit.

"The biodiesel industry is in the midst of a storm in Washington, D.C., but we've been here before," Rehagen said.

As such, many biodiesel developers may be cautious to commit to big capital investments for the future, particularly those for grassroot projects. Still, Industrial Info is tracking seven U.S. biodiesel projects worth $442.5 million that are now under construction.

In Norco, Louisiana, a biodiesel plant expansion by Diamond Green Diesel LLC is expected to wrap up construction this summer. Diamond Green Diesel is a joint venture between Valero Energy Corporation (NYSE:VLO) (San Antonio, Texas) and Darling Ingredients Incorporated (NYSE:DAR) (Irving, Texas). The project includes the installation of pre-treatment equipment and a transesterification reactor to boost production capacity from the present 160 million gallons per year to 275 million gallons per year. For more information, see Industrial Info's project report.

Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, six offices in North America and 12 international offices, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle™, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities. Follow IIR on: Facebook - Twitter - LinkedIn. For more information on our coverage, send inquiries to info@industrialinfo.com or visit us online at http://www.industrialinfo.com.